Castrol, HUL among 7 companies that paid more in dividends than their FY25 profits

ET Intelligence Group: Companies with a consistent dividend paying record are often preferred by conservative investors given the reasonable certainty of annual cash flow. Apart from consistency, the extent of payout to shareholders also plays a critical role. This is determined by the payout ratio, which is dividends as a percentage of annual net profits. Companies with a high payout ratio distribute a larger share of profits among shareholders. According to an ETIG analysis, there were seven companies among the BSE 500 index components, which paid more dividends in FY25 compared with their net profits for the fiscal year. It implies dividend payout ratios in excess of 100%, aided by either special dividends or higher dividends than the previous year.

Each of these companies had a market cap above ₹20,000 crore as on Friday while four had a market cap above ₹1 lakh crore indicating that more mature businesses tend to report higher payout ratios given stability in their cash flows. The list includes Castrol India, Page Industries, Tech Mahindra, Hindustan Zinc, Hindustan Unilever (HUL), Aster DM Healthcare, and Godrej Consumer Products. Among these companies, Castrol India, HUL, and Aster DM declared special dividends. In the case of Aster DM, the company declared a substantially high special dividend of ₹118 per share after separating its Gulf business last year. It paid around ₹6,150 crore in dividend compared with its net profit of over ₹5,400 crore in FY25.
On the sector front, IT, FMCG, and metals topped the charts in terms of highest payout ratios. IT companies reported payout ratio of 76% for FY25 at the aggregate level, much higher th an 60% seen in the previous year. For FMCG companies, the ratio dropped to 64% from 80.5% while it increased to 53% for metal companies from 49% by similar comparison.